MINDANAO II GEOTHERNMAL PARTNERSHIP v. COMMISSIONER OF INTERNAL REVENUE (Consolidated with CTA Case No. 7960, 7942)

REPUBLIC OF THE PHILIPPINES Court ofTax Appeals QUEZON CITY Special Third Division1 MINDANAO II GEOTHERMAL CTA CASE NOS. 7899, 7942, PARTNERSHIP, &7960 Petitioner, (CTA EB No. 957) (G.R. Nos. 213776 & 213777) -versus- Members: Bautista, Chairperson Fa bon-Victorino, and Ringpis-Liban, 11. COMMISSIONER OF Promulgated: INTERNAL REVENUE, Respondent. .f 1n ?. !) 2017 X----------------------------------------------------~ ------ ------;-o-:-2-.-.S-l-.-.,-.-.-..-.-.-------X AMENDED DECISION BAUTISTA, J.: The Case Submitted anew for decision are the consolidated Petitions for Review docketed as CTA Case Nos. 78992 and 79423 pursuant to the Decision4 of the Court of Tax Appeals ("CTA") En Bane dated November 11, 2013 partially granting the Petition for Review by remanding CTA Case Nos. 7899 and 7942 to the CTA Third Division ("Court in Division") for the proper and immediate determination of the propriety of the claim, and the specific amount of refund or tax credit certificate ("TCC") to which petitioner is entitled, if any; and 1 Pursuant to Section 2 of Republic Act No. 1125, as amended, and the M emorandum from Presiding Justice Roman G. Del Rosario dated March 28, 2017, designating the current Third Division to act on matters pertaining to CTA Case Nos. 7899, 7942 and 7960, in view of the retirement of Associate Justices Olga Palanca-Enriquez and Amelia Cotangco-Manalastas who were the members of the Third Division, which issued the Decision and Resolution dated August 1, 2012 and November 7, 2012, respectively. 2 Records, CTA Case No. 7899, Vol. 1, Petition for Review ("PFR "), pp. 1-14, with annexes. 3 Id. , CTA Case No. 7942, PFR, pp. 1-17, with annexes. 4 Rollo, CTA Case No. 95 7, Vol. 1, Decision, pp. 607-624.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7%0 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page2of22 denying the Petition for Review as to CTA Case No. 7960 for lack of merit.5 The consolidated Petitions for Review pray that judgment be rendered: 1. ordering respondent to refund or to issue a TCC in the amount of Php4,048,011.48 representing excess and unutilized creditable input taxes for the 1st Quarter of calendar year ("CY") 2007;6 and 2. ordering respondent to refund or to issue a TCC in the amount of Php1,484,924.01 representing excess and unutilized creditable input taxes for the 2nd Quarter of CY 2007;7 The Partiess Petitioner is a partnership duly registered with the Securities and Exchange Commission, with principal address at Barangay Homavis, Kidapawan City, Cotabatao. Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue (" CIR"), vested with authority to act as such, including, among others, the power to decide, approve and grant refunds or tax credits of erroneously or excessively paid taxes. The Facts The Court in Division reiterates the relevant facts9 of the case as follows: On March 11, 1997, petitioner entered into a Build- Operate-Transfer [("BOT")] Contract with the Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) for the finance, engineering, supply, installation, testing, commissioning, operation and maintenance of a 48.25 5 Rollo, Vol. 1, Decision, Dispositive Portion, p. 623. 6 Records, CTA Case No. 7899, PFR, Vol. 1, Prayer, p. 7. 7 Id., CTA Case No. 7942, PFR, Vol. 1, Prayer, p. 7. 8 Id., CTA Case Nos. 7899, 7942 and 7960, Vol. 1, Decision, The Parties, pp. 430-431. ( 9 Id., The Facts, pp. 431-441.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page3of22 megawatt geothermal power plant, provided that PNOC-EDC shall supply and deliver steam to petitioner at no cost. In turn, petitioner shall convert the steam into electric capacity and energy for PNOC-EDC and shall deliver the same to the National Power Corporation (NPC) for and [o]n behalf of PNOC-EDC. As a power generation company utilizing geothermal energy and steam, petitioner's sale of generated power and delivery of electric capacity and energy to NPC for and [o]n behalf of PNOC-EDC, under the BOT contract, is VAT zero- rated, pursuant to Section 108(B) of the NIRC of1997, as amended by RA 9337 [("1997 NIRC")]. As a result of said transactions, petitioner allegedly incurred input VAT, which are attributed and allocated to effectively zero-rated sales in the amount of P[hp]8,255,554.02 for taxable year 2007. On the following dates, petitioner filed with the BIR its Original Quarterly VAT Returns for taxable year 2007: Taxable Quarter Date of Filing of Original Return 1st April25, 2007 2nd July 25, 2007 3rd 4th October 24,2007 January 28, 2008 On March 30, 2009, petitioner filed its administrative claim for refund of unutilized input VAT for taxable year 2007, together with the supporting documents. Due to respondent's inaction, petitioner filed with the [Court in Division] the following Petitions for Review: CTACaseNo. Quarters Unutilized Input Date of Filing of VAT Petition for Review 7899 lSI 7942 P[hp]4,048,011.48 March 31, 2009 7960 2nd P[h_�_]1,484,924.01 June 30, 2009 3rd & 4th P[hp]2,722,618.53 August 12, 2009 On August 12, 2009, petitioner filed a "Motion to Consolidate["] [CTA] Case No. 7960 with [CTA] Case Nos. 7899 and 7942, which the Court [in Division] granted. Thus, [CTA] Case Nos. 7960 and 7942 were consolidated with [CTA] Case No. 7899, the case bearing the lowest docket number. In [CTA] Case No. 7899, respondent CIR, in her [A]nswer, alleged by way of special and affirmative defenses: (

AMENDED DECISION CTA CASE NOS. 7899,7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page4of22 XXX XXX XXX On the other hand, in [CTA] Case No. 7942, respondent CIR, in her [A]nswer, alleged by way of special and affirmative defenses: XXX XXX XXX Petitioner presented Michael L. Aguirre and Daisy C. Abenes, as witnesses, and documentary evidence, which were admitted by the Court [in Division] in its Resolutions dated May 18,2011 and July 22,2011. On the other hand, respondent CIR was declared to have waived her right to present evidence for the repeated failure of respondent CIR's counsel to appear during the scheduled initial presentation of the evidence for respondent, despite notice. Thereafter, both parties were ordered to file their simultaneous memoranda, within thirty (30) days from notice. Afterwhich, the case shall be deemed submitted for decision. On September 22, 2011, petitioner filed its "Memorandum[."] On the other hand, respondent failed to file her memorandum despite notice; hence, on October 25, 2011, the case was deemed submitted for decision. Records show that the Court in Division promulgated a Decision1odated August 1, 2012, with the dispositive portionn reading as follows: WHEREFORE, premises considered: 1) As regards [CTA] Case No. 7899, the Petition for Review is hereby DISMISSED for having been prematurely filed; 2) As regards [CTA] Case No. 7942, the Petition for Review is hereby DISMISSED for having been prematurely filed; and 10 Records, CTA Case Nos. 7899, 7942 and 7960, Vol. 1, Decision, pp. 429-460; penned by Associate Justice Olga Palanca-Enriquez, with Associate Justice Amelia R. Contangco-Manalastas concurring and Associate Justice Lovell R. Bautista's Concurring and Dissenting Opinion. n Id., Dispositive Portion, pp. 455-456.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page5of22 3) As regards [CIA] Case No. 7960, the Petition for Review is hereby PARTLY GRANTED. Accordingly, respondent CIR is hereby ORDERED TO REFUND OR [TO] ISSUE A TAX CREDIT CERTIFICATE in favor of petitioner in the reduced amount of SIX THOUSAND SIX HUNDRED THIRTY FOUR PESOS AND 29/100 (P[hp]6,634.29), representing unutilized input VAT paid on its domestic purchases of goods and services which are attributable to zero- rated sales for the third and fourth quarters of calendar year 2007. SO ORDERED.I2 Petitioner filed a Motion for Reconsideration13 on August 28, 2012; to which respondent filed a Comment (On Petitioner's Motion for Reconsideration)14 on September 25,2012. On November 7, 2012 the Court resolved to denyls petitioner's Motion for Reconsideration, with the following dispositive portion16 for reference: WHEREFORE, premises considered, petitioner's "Motion for Reconsideration" is hereby DENIED for lack of merit. SO ORDERED.17 Not satisfied, petitioner filed with the Court En Bane a Motion for Additional Time to File Petition for Review1B on November 27, 2012; which was granted by the Court En Bane in a Minute Resolution19 dated November 29,2012. On December 12, 2012, petitioner filed via registered mail a Petition for Review2o before the Court En Bane docketed as CTA EB 12 Emphases retained. 13 Records, CTA Case Nos. 7899, 7942 and 7960, Vol.l, Motion for Reconsideration, pp. 461-502. 14 Id., Vol. 2, Comment (On Petitioner's Motion for Reconsideration), pp. 518-528. 1s Id., Resolution, pp. 530-538. 16 Id., Resolution, Dispositive Portion, p. 538. 17 Emphases retained. 18 Rollo, Vol. 1, Motion for Additional Time to File Petition for Review, pp. 1-47, with annexes. 19 Id., Minute Resolution, p. 48. 2o Id., PFR, pp. 51-229, with annexes.

AMENDED DECISION CTA CASE NOS. 7899,7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 6of22 No. 957; with respondent's Comment (Re: Petitioner's Petition for Review)21 filed on March 15,2013. On April3, 2013, the Court En Bane resolved22 to give due course to the Petition for Review and required the parties to file their respective memoranda. With the filing of petitioner's Memorandum23 by registered mail on May 20,2013, and respondent's Memorandum24 on June 3, 2013, the case was deemed submitted for resolution25 on July 3, 2013. On November 11, 2013, the Court En Bane promulgated a Decision26 which partially granted petitioner's Petition for Review. The dispositive portion27 of the said Decision read as follows: WHEREFORE, premises considered, this Court resolves to PARTIALLY GRANT the instant petition for review. The assailed Decision dated August 1, 2012 and the assailed Resolution dated November 7, 2012 promulgated by the [Court in] Division are hereby PARTIALLY REVERSED and SET ASIDE. Accordingly, petitioner's claims for VAT refund or issuance of TCC under CTA Case Nos. 7899 and 7942 are hereby REMANDED to the [Court in] Division for the proper and immediate determination of the propriety of the claim. Thereafter, the [Court in] Division shall make a determination of the specific amount of refund or TCC to which petitioner is entitled[], if any. As to the petitioner's claim for VAT refund or issuance of TCC under CTA Case No. 7960, the instant petition for review is hereby DENIED for lack of merit. SO ORDERED.2s 21 Rollo, Vol. 1, Comment (Re: Petitioner's Petition for Review), pp. 425-437. 22 Id., Resolution, pp. 439-440. 23 Id., Vol. 2, petitioner's Memorandum, pp. 530-590. 24 Id., respondent's Memorandum, pp. 592-602. zs Id., Resolution, pp. 604-605. 26 Id., Decision, pp. 607-624. 27 Rollo, Vol. 2, Decision, Dispositive Portion, p. 623. 28 Emphases retained.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 7 of22 Respondent and petitioner filed their Motions for Partial Reconsideration before the Court En Bane on December 10, 2013, the former by personal service29 and the latter by registered mail30. After comments31 were filed by both parties on the other's Motions for Reconsideration, the Court En Bane promulgated a Resolution on August 4, 2014 denying both Motions for Partial Reconsideration, with the following dispositive portion: WHEREFORE, premises considered, respondent's "Motion for Partial Reconsideration (Re: Decision dated November 11, 2013)" filed on December 10, 2013 and petitioner's "Motion for Partial Reconsideration" filed on December 10,2013 are hereby DENIED for lack of merit. SO ORDERED.32 Both parties filed their Petitions for Review on Certiorari before the Supreme Court which were docketed as G.R. Nos. 213776 and 213777, entitled "Commissioner of Internal Revenue v. Mindanao II Geothermal Partnership" and "Mindanao II Geothermal Partnership v. Commissioner of Internal Revenue," respectively. On February 25,2015, the Supreme Court First Division issued a Resolution33 consolidating G.R. Nos. 213776 and 213777. On June 29, 2015, the Supreme Court issued a Minute Resolution34 denying both Petitions for Review on Certiorari. The pertinent portion of the Supreme Court Resolution reads as follows: XXX XXX XXX Considering the allegations, issues, and arguments adduced in the petitions for review on certiorari in G.R. Nos. 213776 and 213777 of the Decision and Resolution dated November 11, 2013 and August 4, 2014, respectively, of the 29 Rollo, Vol. 2, Motion for Partial Reconsideration (Re: Decision dated November 11, 2013), pp. 628-640. 30 Id., Motion for Partial Reconsideration, pp. 642-655. 31 Rollo, Vol. 2, Comment (To Respondent's Motion for Partial Reconsideration) filed by registered mail on February 10, 2014, pp. 697-704; Rollo, Vol. 2, Comment Re: Petitioner's Motion for Partial Reconsideration filed by registered mail on June 3, 2014, pp. 738-745. 32 Emphases retained. 33 Records, CTA Case Nos. 7899, 7942 and 7960, Vol. 3, Resolution, pp. 1382-1383. 34 Id., Minute Resolution, p. 1386.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page8of22 Court of Tax Appeals in CTA EB No. 957, the Court furthermore resolves to DENY the petitions for failure of petitioners to sufficiently show that the Court of Tax Appeals committed any reversible error in the challenged decision and resolution as to warrant the exercise of this Court's discretionary appellate jurisdiction. On November 9, 2016, the Supreme Court issued a Resolution3s which reads as follows: G.R. No. 213776 (Commissioner of Internal Revenue vs. Mindanao II Geothermal Partnership) and G.R. No. 213777 (Mindanao II Geothermal Partnership vs. Commissioner of Internal Revenue). - Acting on the Office of the Solicitor General's motion for partial reconsideration of the Resolution dated June 29, 2015 which denied the petitions for review on certiorari, and considering that there is no substantial argument to warrant a modification of this Court's resolution, the Court resolves to DENY reconsideration with FINALITY. The comment/ opposition of Mindanao II Geothermal Partnership, respondent in G.R. No. 213776 and petitioner in G.R. No. 213777, to the aforesaid motion for partial reconsideration is NOTED. NO FURTHER pleadings or motions shall be entertained herein. Let an ENTRY of judgment in these cases be made in due course.36 On February 18, 2016, the Resolution dated June 29, 2015 has become final and executory and has been recorded in the Book of Entries of Judgments.37 On December 21,2016, the Court En Bane received the Letter of Transmittal from the Supreme Court dated June 22, 2016, with photocopies of the Resolution dated June 29, 2015 and the Entry of Judgment made therein. 35 Records, CTA Case Nos. 7899, 7942 and 7960, Vol. 3, Resolution, p. 1388. 36 Emphases retained. 37 Records, CTA Case Nos. 7899, 7942 and 7960, Vol. 3, p. 1392.

AMENDED DECISION CTA CASE NOS. 7899,7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 9of22 On April 4, 2017, petitioner's Motion for Issuance of Writ of Execution in CTA Case No. 7960 was granted and the Court in Division ordered the issuance of the corresponding Writ of Execution. On May 26,2017, the Court in Division ordered38 both parties to file their respective manifestations regarding any supervening event that might affect the determination of petitioner's claim for VAT refund or for TCC in CTA Case Nos. 7899 and 7942. On June 15, 2017, the Court's Judicial Records Division issued a Records Verification Report stating that both parties failed to comply with the Resolution of the Court in Division dated May 26,2017. On June 16, 2017, petitioner filed an Urgent Motion to Admit Attached Manifestation, which was granted by the Court in Division in a Resolution dated June 27, 2017. Consequently, petitioner's Manifestation stating that there are no supervening events that might affect the determination of its claim for VAT refund or for issuance of TCC was admitted and the case was submitted for resolution; hence this Amended Decision. Issue WHETHER PETITIONER IS ENTITLED TO THE CLAIM FOR REFUND OR TCC FOR THE 1ST AND 2ND QUARTERS OF CY 2007 IN THE AGGREGATE AMOUNT OF PHP5,532,935.4939 REPRESENTING EXCESS AND UNUTILIZED CREDITABLE INPUT TAXES FOR THE 1ST AND 2ND QUARTERS OF CY 2007. The Ruling of the Court Petitioner's claim for refund or TCC is anchored on Sections 112(A) and (C) of the 1997 National Internal Revenue Code as amended by RA No. 9337 ("1997 NIRC"), which reads as follows: SEC. 112. Refunds or Tax Credits ofInput Tax.- 38 Records, CTA Case Nos. 7899, 7942 and 7960, Vol. 3, Resolution, pp. 1466-1467. 39 Php4,048,011.48 plus Php1,484,924.01.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7%0 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 10of22 (A) Zero-Rated or Effectively Zero-Rated Sales. - Any VAT-registered person, whose sales are zero-rated or effectively zero-rated may, within two (2) years after the close of the taxable quarter when the sales were made, apply for the issuance of a tax credit certificate or refund of creditable input tax due or paid attributable to such sales, except transitional input tax, to the extent that such input tax has not been applied against output tax: Provided, however, That in the case of zero- rated sales under Section 106(A)(2)(a)(1), (2) and (b) and Section 108 (B)(1) and (2), the acceptable foreign currency exchange proceeds thereof had been duly accounted for in accordance with the rules and regulations of the Bangko Sentral ng Pilipinas (BSP): Provided, further, That where the taxpayer is engaged in zero-rated or effectively zero-rated sale and also in taxable or exempt sale of goods of properties or services, and the amount of creditable input tax due or paid cannot be directly and entirely attributed to any one of the transactions, it shall be allocated proportionately on the basis of the volume of sales: Provided, finally, That for a person making sales that are zero-rated under Section 108(8)(6), the input taxes shall be allocated ratably between his zero-rated and nonzero-rated sales. XXX XXX XXX (C) Period within which Refund or Tax Credit of Input Taxes shall be Made.- In proper cases, the Commissioner shall grant a refund or issue the tax credit certificate for creditable input taxes within one hundred twenty (120) days from the date of submission of complete documents in support of the application filed in accordance with Subsection (A) hereof. In case of full or partial denial of the claim for tax refund or tax credit, or the failure on the part of the Commissioner to act on the application within the period prescribed above, the taxpayer affected may, within thirty (30) days from the receipt of the decision denying the claim or after the expiration of the one hundred twenty day-period, appeal the decision or the unacted claim with the Court of Tax Appeals. Pursuant to the afore-quoted provisions and jurisprudence40, a taxpayer may claim a refund or a TCC for input taxes paid on 4�Commissioner ofInternal Revenue v. Toledo Power Company, G.R. Nos. 195175 & 199645, August 10, 2015, 765 SCRA 511; Luzon Hydro Corporation v. Commissioner of Internal Revenue, G.R. No. 188260, November 13, 2013, 709 SCRA 462; Southern Philippines Power Corporation v. Commissioner ofInternal Revenue, G.R. No. 179632, October 19, 2011, 659 SCRA 658; Silicon Philippines, Inc. (Formerly Intel Philippines Manufacturing, Inc.) v. Commissioner of Internal Revenue, G.R. No. 172378, January 17, 2011, 639 SCRA 521; AT&T Communications Services Philippines, Inc. v. Commissioner of Internal

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 11 o�22 purchases of goods and services attributable to zero-rated sales upon compliance with the following requisites: 1. the taxpayer-claimant must be VAT-registered; 2. there must be zero-rated or effectively zero-rated sales; 3. input taxes were incurred or paid; 4. such input taxes are attributable to zero-rated or effectively zero-rated sales; 5. said input taxes were not applied against any output VAT liability; and 6. the claim was filed within the prescriptive period. The administrative and judicial claims were timely filed. The sixth requisite regarding timeliness of petitioner's claim for refund or TCC shall no longer be discussed, in view of the Court En Bane's Decision dated November 11,2013 quoted hereunder, to wit: The first issue pertains to the dismissal of petitioner's judicial claims for refund or issuance of TCC in the cases docketed as CTA Case No. 7899 and 7942 on the ground of lack of jurisdiction by the [Court in] Division. Applying the doctrine laid down in Aichi, the [Court in] Division found that the petitions for review filed by petitioner in CTA Case No. 7899 and 7942 were prematurely filed and consequently dismissed the same for lack of jurisdiction. Records show that petitioner filed its administrative claim for refund or issuance of TCC for its unutilized input VAT for the taxable year 2007 on March 30, 2009. The judicial claim for its unutilized input VAT covering the first quarter of Revenue, G.R. No. 182364, August 3, 2010, 626 SCRA 567; San Roque Power Corporation v. Commissioner of Internal Revenue, G.R. No. 180345, November 25, 2009, 605 SCRA 536; Intel Technologt; Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 166732, April 27, 2007, 522 SCRA657.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 12of22 2007, docketed as CTA Case No. 7899, was filed on March 31, 2007 or one (1) day after petitioner's filing of its administrative claim. On the other hand, the judicial claim for its unutilized input VAT covering the second quarter of 2007, docketed as CTA Case No. 7942, was filed on June 30,2009 or 28 days before the lapse of the 120-day period for respondent CIR to decide the claim. Clearly, the [Court in] Division was correct in dismissing these cases for having been prematurely filed, based on prevailing jurisprudence when the assailed Decision was rendered. Recent pronouncements of the Supreme Court En Bane, however, specifically in the cases of San Roque, Taganito, and Philex, declared: XXX XXX XXX Respondent's argument that petitioner cannot rely upon the doctrine laid down in San Roque is unavailing. The ruling itself grants petitioner the benefit of the excepted period even though petitioner, through its pleadings filed before this Court, consistently stated that it relied on the previous pronouncements of the CTA on the matter without ever mentioning its reliance on BIR Ruling No. DA-489-03. The Supreme Court unequivocally stated that the BIR ruling is a GENERAL INTERPRETATIVE RULE which misled "all taxpayers into filing prematurely judicial claims before the CTA" because "it was a response to a query made, not by a particular taxpayer, but by a government agency tasked with processing tax refunds and credits." In the case of Nippon, the Supreme Court clarified San Roque, Taganito and Philex in saying that: XXX XXX XXX As guide, the consolidated cases of Mindanao I and II are enlightening, wherein the Supreme Court stated: []We summarize the rules on the determination of the prescriptive period for filing a tax refund or credit of unutilized input VAT as provided in Section 112 of the 1997 Tax Code, as follows: (1) An administrative claim must be filed with the CIR within two years after the close of the taxable

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 13 of22 quarter when the zero-rated or effectively zero-rated sales were made. (2) The CIR has 120 days from the date of submission of complete documents in support of the administrative claim within which to decide whether to grant a refund or issue a tax credit certificate. The 120-day period may extend beyond the two-year period from the filing of the administrative claim if the claim is filed in the later part of the two-year period. If the 120-day period expires without any decision from the CIR, then the administrative claim may be considered to be denied by inaction. (3) A judicial claim must be filed with the CTA within 30 days from the receipt of the CIR's decision denying the administrative claim or from the expiration of the 120-day period without any action from the CIR. (4) All taxpayers, however, can rely on BIR Ruling No. DA-489-03 from the time of its issuance on 10 December 2003 up to its reversal by this Court in Aichi on 6 October 2010, as an exception to the mandatory and jurisdictional 120+30 day periods.[] (Emphases added) Based on the foregoing, the Supreme Court reiterated that the observance of the 120+30-day period is mandatory and jurisdictional. By way of exception, taxpayers who from December 10, 2003 up to October 6, 2010 filed their judicial claims for tax refund or issuance of tax credit certificate without regard to the 120+30-day period are exempted from the strict application of the same. As was discussed in San Roque, Taganito and Philex, premature filing during the excepted period does not constitute an infirmity on the jurisdiction of the Court of Tax Appeals to act on the claim. As afore-discussed, petitioner filed its administrative claim for refund or issuance of TCC for its unutilized input VAT for the taxable year 2007 on March 30, 2009. Its judicial claims were filed before the CTA on March 31, 2009 for its unutilized input VAT covering the first quarter and on June 30, 2009 for its unutilized input VAT covering the second quarter, both of taxable year 2007. In fine, the administrative claim was filed with the CIR within two years after the close of the taxable quarter when the zero-rated sales were made. This is well within the two-year period provided by Section 112 (A) of the NIRC of 1997 as

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 14 of22 amended by R.A. No. 9337. More importantly, the judicial claims were filed within the period during which petitioner may appropriately rely on BIR Ruling No. DA-489-03, thereby allowing the CTA Third Division to acquire jurisdiction thereon.4t The Supreme Court recognized BIR Ruling No. DA-489-03, a general interpretative rule, as a valid exception to the strict compliance with the 120+30-day prescriptive period. All taxpayers can rely on BIR Ruling No. DA-489-03 from the time of its issuance on December 10, 2003 up to its reversal on October 6,2010.42 This doctrine was reiterated in the case of Cargill Philippines, Inc. vs. Commissioner of Internal Revenue43, viz.: Nevertheless, the Court, in the case of CIR v. San Roque Power Corporation (San Roque), recognized an exception to the mandatory and jurisdictional nature of the 120-day period. San Roque enunciated that BIR Ruling No. DA-489-03 dated December 10, 2003, which expressly declared that the "taxpayer-claimant need not wait for the lapse of the 120-day period before it could seek judicial relief with the CTA by way of petition for review," provided a valid claim for equitable estoppel under Section 246 of the NIRC. In the more recent case of Taganito Mining Corporation v. CIR, the Court reconciled the pronouncements in Aichi and San Roque, holding that from December 10,2003 to October 6,2010 which refers to the interregnum when BIR Ruling No. DA-489- 03 was issued until the date of promulgation of Aichi, taxpayer- claimants need not observe the stringent 120-day period; but before and after said window period, the mandatory and jurisdictional nature of the 120-day period remained in force, vzz.: Reconciling the pronouncements in the Aichi and San Roque cases, the rule must therefore be that during the period December 10, 2003 (when BIR Ruling No. DA-489-03 was issued) to October 6, 2010 (when the Aichi case was promulgated), taxpayers-claimants need not observe the 120- day period before it could file a judicial claim for 41 Rollo, Vol. 2, Decision, pp. 614-618; Emphases retained. 42 Commissioner of Internal Revenue v. San Roque Pawer Corporation, Taganito Mining Corporation v. Commissioner of Internal Revenue, and Philex Mining Corporation v. Commissioner of Internal Revenue (San Roque case), G.R. Nos. 187485, 196113, and 197156, February 12,2013,690 SCRA 336. 43 G.R. No. 203774, March 11, 2015, 753 SCRA 124.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 15of22 refund of excess input VAT before the CTA. Before and after the aforementioned period (i.e., December 10, 2003 to October 6, 2010), the observance of the 120-day period is mandatory and jurisdictional to the filing of such claim.44 In the case at bar, petitioner filed its administrative claim for refund or TCC on March 30,200945, while the judicial claims were filed on March 31, 200946 and June 30, 200947, for CTA Case Nos. 7899 and 7942, respectively, or during the period of effectivity of BIR Ruling No. DA-489-03, thus, it is within the window period stated in the San Roque Case, i.e., when taxpayer-claimants need not wait for the expiration of the 120-day period before seeking judicial relief. The Court shall now determine petitioner's compliance with the other requisites. Petitioner is a VAT-registered entity and had zero-rated sales during the subject periods. Petitioner complied with the first requisite considering that it is a VAT-registered taxpayer with BIR Certificate of Registration No. OCN 1997-108-008410 and Taxpayer Identification No. 004-766-953.48 As regards the second requisite, records show that petitioner owns and operates a 48.25-megawatt geothermal power plant facility, which has been accredited by the Department of Energy as a Block Power Production Facility49 and with a Certificate of Compliance No. 03-10-GXT25-0025, dated October 15, 2003.50 As a VAT-registered power generation company utilizing geothermal energy, petitioner's sale of generated power and delivery of electric capacity and energy to the NPC for and on behalf of PNOC-EDC, pursuant to the BOT contract, is VAT zero-rated in the amount of Php209,670,917.63 which was declared in its Quarterly VAT Returns for the first and second quarters of CY 2007, as follows: 44 Emphases retained. 45 Records, CTA Case Nos. 7899, 7942 and 7960, Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "E-1". 46 Id., CTA Case No. 7899, Vol. 1, p.l. 47 Id., CTA Case No. 7942, p. 1. 48 Id., CTA Case Nos. 7899, 7942 and 7960, Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "C." 49 Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "D." so Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "FF." (

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 16of22 PERIOD (CY 2007) ZERO-RATED SALES EXHIBIT 1st Quarter "F," Line 17 2nd Quarter Php 106,208,158.43 "G," Line 17 TOTAL 103,462,759.20 PHP 209,670,917.63 In support of the foregoing, petitioner submitted in evidence its sales invoices51 and official receipts (0Rs)52, stamped with the words "ZERO RATED VAT," issued to its sole customer, PNOC-EDC, during the periods of the subject claim. Consequently, petitioner's sale of electricity to PNOC-EDC in the aggregate amount of Php209,670,917.63 qualifies for VAT zero-rating. Input VAT paid or incurred are attributable to zero-rated or effectively zero-rated sales. In its Quarterly VAT Returns for the first53 and second54quarters of CY 2007, petitioner declared input VAT on its domestic purchases of goods other than capital goods and services in the aggregate amount of Php5,532,935.49, broken down as follows: DETAILS 1ST QUARTER 2ND QUARTER TOTAL Input VAT on purchases of 668.2855 Php goods other than capital goods - Php 668.28 Input VAT on purchases of services Php 4,048,011.4856 1,484,255.7357 5,532,267.21 TOTAL PHP 4,048,011.48 PHP 1,484,924.01 PHP 5,532,935.49 Petitioner submitted various suppliers' invoices and 0Rs58 in support of its claim on unutilized input taxes. 51 Records, CTA Case Nos. 7899, 7942 and 7960, Exhibits Folder, Exhibits "U.l," "U.2," "U.S," "U.7," "V.l," "V.2," "V.5," and "V.8." 52 Id., Exhibits "U.3A," "U.3B," "U.3C," "U.4," "U.6A," "U.6B," "U.6C," "U.8A," "U.8B," "U.8C," "V.3A," "V.3B," "V.3C," "V.6A," "V.6B," "V.6C," "V.9A," "V.9B," and "V.9C." 53 Id., Exhibits Folder "A" to "P" and "BB" to "GG," Exhibit "F." 54 Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "G." 55 Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "G," line 21F. 56 Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "F," line 21J. 57 Records, CTA Case Nos. 7899, 7942 and 7960, Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "G," line 21J. 58 Id., Exhibit Folders "Q.l"- "Q.53;" "R.l" to "R.69B."

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page17 of22 Upon perusal of the said documents, the Court-commissioned Independent Certified Public Accountant ("ICPA"), Mr. Michael Aguirre, disallowed the following input VAT amounting to Php230,051.00 for not being supported with proper documents, to wit: DETAIL AMOUNT REFERENCE Purchases of services without original and valid OR and outside the 2007 covered period Php 99,150.00 Exhibit "P," Annex D Purchases of goods without original/valid sales invoice but with original/valid ORs 690.32 Exhibit "P," Annex E.1 Purchases of services with no date indicated in the ORs 130,210.68 Exhibit "P," Annex E.2 TOTAL PHP 230,051.00 However, out of the Php230,051.00 disallowed by the ICPA, only Php130,051.68 was claimed in the period covered, i.e., 2nd quarter of CY 200759, thus it will be deducted from the unutilized input VAT. To have a valid claim for refund, petitioner must comply with the invoicing requirements provided under Section 11 of Republic Act ("RA") No. 9337, amending Section 113 of the 1997 NIRC. Section 11, RA No. 9337 reads as follows: SEC. 11. Section 113 of the same code, as amended, is hereby further amended to read as follows: SEC. 113 Invoicing and Accounting Requirements for VAT-Registered Persons. - Invoicing Requirements. - A VAT-registered person shall issue: A VAT invoice for every sale, barter or exchange of goods or properties; and A VAT official receipt for every lease of goods or properties, and for sale, barter or exchange of services. Information contained in the VAT Invoice or VAT Official Receipt. - The following information shall be indicated in the VAT invoice or VAT official receipt: 59 Records, CTA Case Nos. 7899, 7942 and 7960, Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "P," Annex C.2A.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) PagelS of22 A statement that the seller is a VAT- registered person, followed by his taxpayer's identification number (TIN); The total amount which the purchaser pays or is obligated to pay to the seller with the indication that such amount includes the value- added tax: Provided, That: The amount of tax shall be shown as a separate item in the invoice or receipt; If the sale is exempt from value-added tax, the term "VAT-exempt sale" shall be written or printed prominently on the invoice or receipt; If the sale is subject to zero percent (0%) value-added tax, the term "zero-rated sale" shall be written or printed prominently on the invoice or receipt; If the sale involves goods, properties or services some of which are subject to and some of which are VAT zero-rated or VAT-exempt, the invoice or receipt shall clearly indicate the breakdown of the sale price between its taxable, exempt and zero-rated components, and the calculation of the value-added tax on each portion of the sale shall be shown on the invoice or receipt: Provided, That the seller may issue a separate invoices or receipts for the taxable, exempt and zero-rated components of the sale. The date of transaction, quantity, unit cost and description of goods or properties or the nature of service; and In the case of sales in the amount of one thousand pesos (P[hp]l,OOO) or more where the sale or transfer is made to a VAT-registered person, the name, business style, if any, address and taxpayer identification number (TIN) of the purchaser, customer or client. Applying the afore-quoted provisions to the case at bar, and after examination of the documentary exhibits submitted by petitioner, the

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 19of22 Court finds that petitioner failed to comply with the substantiation requirements for its claim for refund/TCC amounting to Php2,479,138.93, detailed as follows: CUSTOMER G/S OR/I NV EXH. INPUT VAT REASON FOR EXCEPTION NO. 1st Quarter (Exh. "P," Annex C.l) Marubeni Energy Services Corp. s 243 Q.1 Php 28,900.18 VAT not separately indicated in the OR Marubeni Energy Services Corp. Marubeni Energy Services Corp. s 243 Q.1 72,481.59 VAT not separately indicated in the OR Marubeni Energy Services Corp. Plumas Transport Corp. s 243 Q.1 55,172.67 VAT not separately indicated in the OR Smart Communications Triple Eight Travel s 243 Q.1 108,320.57 VAT not separately indicated in the OR Universal Holidays Inc. Marubeni Energy Services Corp. s 854 Q.3 9,107.14 VAT not separately indicated in the OR Marubeni Energy Services Corp. Marubeni Energy Services Corp. s SOA Q.6 148.63 Supported by Statement of Account Marubeni Energy Services Corp. Plumas Transport Corp. s 22024 Q.7 1,119.00 VAT not separately indicated in the OR Smart Communications Triple Eight Travel s 360355 Q.9 428.16 VAT not separately indicated in the OR Julieta Marco Mindanao 1 Geothermal s 245 Q.11 20,461.80 VAT not separately indicated in the OR PLOT Triple Eight Travel s 245 Q.l1 56,895.53 VAT not separately indicated in the OR Ansuico Inc. Plumas Transport Corp. s 245 Q.11 58,917.71 VAT not separately indicated in the OR Marubeni Energy Services Corp. Marubeni Energy Services Corp. s 245 Q.11 103,663.12 VAT not separately indicated in the OR Marubeni Energy Services Corp. Marubeni Energy Services Corp. s 877 Q.13 9,107.14 VAT not separately indicated in the OR Mindanao 1 Geothermal PLOT s SOA Q.18 191.35 Supported by Statement of Account Triple Eight Travel s 22404 Q.19 457.00 VAT not separately indicated in the OR 2nd Quarter (Exh. "P,'' Annex C.2A) s 2132 Q.23 180.00 VAT not separately indicated in the OR Arnica Corporation Cifra Industrial Services s 382 Q.25 195,452.96 VAT not separately indicated in the OR Dawn's Cafe s Q.27 217.64 Supported by Transaction Receipt Jetour Philippines Julieta Marco s 22405 Q.33 921.00 VAT not separately indicated in the OR Marubeni Energy Services Marubeni Energy Services s 54379 Q.35 5,400.00 VAT not separately indicated in the OR Marubeni Energy Services Marubeni Energy Services s 354 Q.40 9,107.14 VAT not separately indicated in the OR PLOT Plumas Transport Corp. s 247 Q.44 30,288.96 VAT not separately indicated in the OR Smart Communication Triple Eight Travel s 247 Q.44 39,341.33 VAT not separately indicated in the OR Triple Eight Travel Jetour Philippines s 247 Q.44 45,183.04 VAT not separately indicated in the OR Marubeni Energy Services Marubeni Energy Services s 247 Q.44 83,623.21 VAT not separately indicated in the OR Marubeni Energy Services Marubeni Energy Services s 388 Q.46 194,883.08 VAT not separately indicated in the OR PLOT Plumas Transport Corp. s Q.48 217.64 Supported by Transaction Receipt Smart Communication Tan Delta Electric s 22937 Q.52 1,255.00 VAT not separately indicated in the OR Triple Eight Travel Triple Eight Travel s 20 R.1 Php 164,736.00 VAT not separately indicated in the OR Triple Eight Travel s 1162 R.3 15,285.00 VAT not separately indicated in the OR G 7321 R.6 321.43 VAT not separately indicated in the 8,838.64 Invoice s 14154 R.7 420.00 VAT not separately indicated in the OR s 2142 R.10 76,775.41 VAT not separately indicated in the OR 47,319.90 VAT not separately indicated in the OR s 249 R.13 186,360.69 VAT not separately indicated in the OR 272,320.95 VAT not separately indicated in the OR s 249 R.13 VAT not separately indicated in the OR 210.39 s 249 R.13 9,107.14 Supported by Transaction Receipt VAT not separately indicated in the OR s 249 R.13 144.28 493.00 Supported by Statement of Account s R.17 1,255.00 VAT not separately indicated in the OR 8,959.90 VAT not separately indicated in the OR s 384 R.19 28,112.58 VAT not separately indicated in the OR 44,639.72 VAT not separately indicated in the OR s SOA R.22 47,223.44 VAT not separately indicated in the OR 96,995.34 VAT not separately indicated in the OR s 23482 R.23 217.64 VAT not separately indicated in the OR 9,107.14 s 23482 R.23 144.27 Supported by Transaction Receipt 30,000.00 VAT not separately indicated in the OR s 14247 R.25 1,255.00 1,255.00 Supported by Statement of Account s 253 R.27 1,255.00 VAT not separately indicated in the OR VAT not separately indicated in the OR s 253 R.27 VAT not separately indicated in the OR VAT not separately indicated in the OR s 253 R.27 s 253 R.27 s R.34 s 399 R.36 s SOA R.41 s 2389 R.42 s 24138 R.44 s 24138 R.44 s 24571 R.46

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7%0 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 20of22 Marubeni Energy Services s 256 R.52 51,457.21 VAT not separately indicated in the OR Marubeni Energy Services 39,833.93 VAT not separately indicated in the OR Marubeni Energy Services s 256 R.52 67,429.17 VAT not separately indicated in the OR Marubeni Energy Services 124,239.35 VAT not separately indicated in the OR PLOT s 256 R.52 Plumas Transport Corp. 217.64 Supported by Transaction Receipt Smart Communication s 256 R.52 9,107.14 VAT not separately indicated in the OR Triple Eight Travel Triple Eight Travel s R.54 149.04 Supported by Statement of Account TOTAL 1,255.00 VAT not separately indicated in the OR s R.56 1,255.00 VAT not separately indicated in the OR s SOA R.60 s 24855 R.68 s 24855 R.68 PHP 2,479,138.93 In addition, the Court disallows input VAT claim for the 1st Quarter of CY 2007 amounting to Php1,152,265.10 supported by Import Entry Declaration ("lED") No. 138403237 (BC Form No. 38-A)60 for the following reasons: 1. No importation of goods or services has been declared by petitioner in its 1st quarterly VAT Return for CY 200761. All input taxes incurred by petitioner for the 1st quarter of 2007 are attributable to its domestic purchase of services. 2. Assuming that such input VAT is attributed to importation of goods or services, the supporting lED does not have any machine validation or Bureau of Customs ("BOC") OR to prove payment of VAT, thus, it should be denied for VAT refund purposes. Therefore, petitioner's substituted unutilized input VAT claim amounts to Php1,771,479.78, computed as follows: DETAILS AMOUNTS CTA Case No. 7899 Php 4,048,011.48 CTA Case No. 7942 1,484,924.01 Php 5,532,935.49 Less: Disallowances 3,761,455.71 1,771,479.78 PeriCPA Php 130,051.68 Per Court 2,479,138.93 Exhibit "Q.37" 1,152,265.10 Php SUBSTANTIATED UNUTILIZED INPUT VAT PHP Since petitioner's sales for the 1st and 2nd quarters of CY 2007 were all zero-rated, the substantiated input VAT of Php1,771,479.78 is entirely attributable thereto. 60 Records, CTA Case Nos. 7899, 7942 and 7960, Exhibit Folders "Q.l"- "Q.53," Exhibit "Q.37." 61 Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "F," line 21H.

AMENDED DECISION CTA CASE NOS. 7899,7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 21 o�22 Petitioner's input VAT payments were not applied against any output VAT liability. A perusal of petitioner's 1st and 2nd Quarterly VAT Returns for CY 2007 shows that it has no output VAT liability against which the substantiated input VAT of Php1,771,479.78 may be applied or credited. Even though the claimed input VAT was carried over by petitioner to the succeeding 3rd62 and 4th63 quarters of CY 2007, the same remained unutilized as petitioner's output VAT liability of Php122,578.9364 for the 3rd quarter of CY 2007 was already deducted from the claim in CTA Case No. 7690. Moreover, the Court further finds that in the first Quarterly VAT Return of CY 200865, petitioner indicated a zero (0.00)66 amount in the portion "Input Tax Carried Over from Previous Quarter." Consequently, the substantiated input taxes for the 1st and 2nd quarters of CY 2007 in the amount of Php1,771,479.78 could not have been carried over or utilized in the 1st quarter of CY 2008 to the succeeding taxable periods. In sum, petitioner has sufficiently proven its entitlement to the refund or issuance of a TCC in the amount of Php1,771,479.78, representing unutilized excess input VAT attributable to its zero-rated receipts for the 1st and 2nd quarters of CY 2007. WHEREFORE, premise considered, the Petitions for Review are hereby GRANTED but in a modified amount. Respondent is hereby ORDERED TO REFUND OR TO ISSUE A TAX CREDIT CERTIFICATE in the amount of ONE MILLION SEVEN HUNDRED SEVENTY ONE THOUSAND FOUR HUNDRED SEVENTY NINE AND 78/100 PESOS (Php1,771,479.78), representing its creditable input value-added taxes paid and attributed to its effectively zero- rated sales for the first and second quarters of CY 2007. 62 Records, CTA Case Nos. 7899, 7942 and 7960, Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "H-7," line 20A. 63 Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "I-6," line 20A. 64 Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "H," line 15B. 65 Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "J." 66 Id., Exhibit Folder "A" to "P" and "BB" to "GG," Exhibit "J," line 20A.

AMENDED DECISION CTA CASE NOS. 7899, 7942, & 7960 (CTA EB No. 957; G.R. Nos. 213776 & 213777) Page 22of22 SO ORDERED. LOVEL~. BAUTISTA Associate Justice MA. BELEN M. RINGPIS-LIBAN Associate Justice ATTESTATION I attest that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. LOVAsEsLJ'~r:vt. eBJAuUstTicIeSTA Chairperson CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Amended Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. ROMAN G. DEL ROSARIO Presiding Justice